Lion seeks additional volume as it announces a fixed price offer of $5.75 for the 2017/18 season

Lion seeks additional volume as it announces a fixed price offer of $5.75 for the 2017/18 season

23 June 2017:- Lion Dairy & Drinks (Lion) has today announced competitive opening pricing for its direct milk suppliers in the southern region for the 2017/2018 season (1 July 2017 – 30 June 2018). Detailed pricing for each region is outlined below.

Since 2013, Lion has offered suppliers in the southern region (Victoria, Tasmania and South Australia) a choice of fixed and variable farmgate pricing options for contracts over one, three or five years in length. Lion’s offer delivers enhanced transparency, visibility and choice to help farmers to better manage market volatility and plan their businesses. Lion suppliers in the southern region have a choice of:

variable pricing underpinned by a minimum pricing guarantee;

fixed pricing for those who prefer a set and determined price; and

an option to combine fixed and variable pricing.

The majority of southern region dairy farmers supplying Lion have chosen to secure all or part of their milk pricing for up to three years. Lion’s southern region pricing for the 2017/2018 milk season based on standard 7.2% milk solids is as follows:

Three year fixed price of $5.65 per kilo of milk solids, delivering a weighted average milk price of $5.79 per KG of milk solids;

One year fixed price of $5.75 per kilo of milk solids, delivering a weighted average milk price of $5.89 per KG of milk solids and

One year variable price of $5.40 per kilo of milk solids, delivering a weighted average milk price of $5.53 per KG of milk solids.

As a demand-driven business, Lion will always seek to meet any additional volume requirements from existing suppliers if possible, before going to market. Lion is currently seeking an additional 50 million litres of milk in northern Victoria for the 2017/2018 season.

Lion Dairy & Drinks Managing Director, Peter West, said: “Lion’s range of pricing options is designed to offer farmers as much choice as possible to help them manage market volatility and plan for their businesses.

“Our 2017/2018 opening pricing and contract options demonstrate our confidence in the dairy market and our commitment to build long term, mutually rewarding partnerships with suppliers. We will continue to focus on driving profitability in key dairy categories through our premium dairy brands and in ensuring sustainable returns through the supply chain.

“We listened to farmers when they told us about the impact volatility in the marketplace has on them. This led us to pioneer our flexible pricing model in the southern region several years ago. Since launching this model we have seen a strong take up from our southern farmers of fixed pricing options which we believe allows farmers to select the blend of risk and certainty that’s right for their business.”

Across Australia, Lion is investing around $200 million in its dairy and drinks manufacturing assets to improve efficiencies. This includes two projects which are expected to be finalised later this year - the $87million investment to transform its white milk and milk-based beverages manufacturing footprint across the Eastern Seaboard and a $43million investment to modernise our Bentley manufacturing site in Western Australia.

“These significant investments, together with continued investment in key brands like Dairy Farmers, Dare Iced Coffee, Farmers Union, King Island Dairy, South Cape and Pura, shows our confidence in the Australian dairy industry and in our growth plans,” Mr West said.

“As a business we do not believe in retrospective price cuts and that is why we have never introduced them. Instead, we are focused on building long-term partnerships with suppliers.

“We work hard to deliver a compelling pricing, tenure and contract choices for dairy suppliers, which is underpinned by our focus on driving sustainable value back into the industry”.

Lion is a leading beverage and food company with a portfolio that includes many of our region’s favourite brands.

We employ more than 7,000 people across Australia and New Zealand predominantly and take great pride in our local manufacturing footprint, which spans 34 sites – including large dairy farms, milk, cheese, yoghurt and juice sites, breweries, craft breweries, wineries, as well as venues and over 39 Liquor King retail outlets in New Zealand.

Lion is a company focused on long-term, sustainable growth. We have a clear 10 year strategy to transform our dairy and juice businesses and champion the nutritional credentials of our portfolio; reinvigorate our beer markets and contribute to vibrant and responsible drinking cultures; and build our presence in high-value categories in targeted Asian markets. To achieve this we invest in our core strategic assets – our people, brands, production facilities and supply chain.